5. 11-8-2007 Center for Accelerating Innovation 55
Elephants and Dragons:
The New Economic Superpowers?
China Overtakes the G3; India is Close Behind
Source: Goldman Sachs, Report 99
Germany
2000
0
50000
25000
2010 2020 2030 2040 2050
US
China
India
Japan
GDP ’03US$bn
6. 11-8-2007 Center for Accelerating Innovation 6
Competitiveness
THEN
Japan:
• High-cost, high-wage,
advanced tech - “just like us”
• We have Entrepreneurial
advantage, they have Industrial
Policy advantage
• Rule of Law
• IP Protections
• Subsidized currency, buying
our debt
• National Security: allies
NOW
China: New Mix
• Low-cost, low-wage,
advanced tech
• Entrepreneurial
• Using Industrial Policy
• Limited Rule of Law
• IP Theft model – FBI:
$300b/year
• Subsidized currency, buying
our debt
• Nat’l security – peer
competitor
7. 11-8-2007 Center for Accelerating Innovation 7
U.S. R&D Investment the World’s Largest, But Others
Increasing Their Investment Faster
Source: OECD Data, Council on Competitiveness
High %
R&D/GDP
8. 11-8-2007 Center for Accelerating Innovation 8
Disintermediation of Value Chain
Research
Invention
Product Dev.
Design
Creativity
Engineering
Prototyping
Production
Manufacturing
Branding
Marketing
Distribution
Services
INNOVATION VALUE CHAIN
VALUECAPTURED
Advanced
Economies
Developing
Economies
9. 11-8-2007 Center for Accelerating Innovation 99
PDA
Cell
phone
PC
Percent of U.S. households with:
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
0 10 20 30 40 50 60 70 80 90 100 110 120
Years since product invented
Television
Radio
Electricity
Telephone
Air Travel
Automobile
Innovation is Accelerating
Sources: J. Gerry Purdy’s presentation “The Next 50 Years in Mobile and Wireless” at Silicon Ventures, Trade press, Industry sources
Internet
Center for Accelerating Innovation
10. 11-8-2007 Center for Accelerating Innovation 10
Continuous Improvement Path
Design to x…
Customer Satisfaction
Cost Optimization
Entrepreneurship
New Products and Services
Globalized Business Models
Emergent/Disruptive Technologies
Organic Innovation Structures
Real Time/Self Configuring Enterprises
short medium long
Potential
Activated By
2 – 3 % annually
5 – 10 %
20 – 30 %
30 – 40 %
Time
US Innovation Potential
InnovationGain
11. 11-8-2007 Center for Accelerating Innovation 11
Innovation Model Is Shifting
Development
Linear Model Ecosystem Model
Research
Commercialization
• Single discipline
• Hierarchical governance
• Closed system
• Internal talent
• Controlled process
• IP hoarded
• Product centric
• Forecasting demand
• Multidisciplinary
• Self organizing
relationships
• Open innovation
• Access talent everywhere
• IP commons
• Customer centric
• Sense and respond
12. 11-8-2007 Center for Accelerating Innovation 12
ROCKFORD INNOVATION ECOSYSTEM
Creative Class Meets to Develop
a Global Innovation Hotspot
Graphic Illustration of the forum
14. 11-8-2007 Center for Accelerating Innovation 1414
How Innovation Ecosystems Evolve
Growth Node
Innovation
Ecosystem
Nascent Relationships
Virtual ClusterTrajectory
None or few firms
Growth potential
Few to many firms
Fast growth
Key linkages
Virtualized functions
Accelerated collaboration
Many nodes
Dense linkages
Network to Network
15. 11-8-2007 Center for Accelerating Innovation 15
New Learning
Systems
Flexible
Supply Chains
Increased
Efficiency
Higher Quality
Goods & Services
Better
Decision-making
Unique
Business Models
Larger Markets
Robust Research
Tools
Less Economic
Volatility
Adaptive
Workforce
Accelerated
Productivity
Innovative Products
& Services
INFORMATION AND COMMUNICATION TECHNOLOGY
(hardware, software, applications, networks and telecommunications)
Tax Revenues
CompetitivenessLower Costs
More Job
Opportunities
Revenues
More Profits
Higher Standard of Living
GDP, Quality of Life
Higher Wages
More Choices
Lower Prices
Modified chart from: ITIF
16. 11-8-2007 Center for Accelerating Innovation 16
Innovation Vital Signs
Joint Initiative:
Surveyed 52 Public Reports, 3126 Indicators
– 18 Global Reports
– 10 National Reports
– 15 Regional Reports
– 9 Enterprise Reports
Industry Indicator Survey – variety of sources and
data types available
Center for Accelerating InnovationCenter for Accelerating Innovation
17. 11-8-2007 Center for Accelerating Innovation 17
Business
Models
Value
Outputs
Impacts
Market
Demand
Macro-Economic
Conditions
National Mindset
Innovation Ecosystem
Major Subsystems and Linkages
Public Policies
Infrastructure
Talent
Networks
Capital
R&D
Source: Egils Milbergs
Innovation Framework
23. 11-8-2007 Center for Accelerating Innovation 23
Innovation Indicators Are Evolving
(slowly)
1st Generation
Input
Indicators
(1950s-60s)
2nd Generation
Output
indicators
(1970s-80s)
3rd Generation
Innovation
Indicators
(1990s)
4th Generation
Process
Indicators
(2000 + emerging
focus)
• R&D
expenditures
• S&T personnel
• Capital
• Tech intensity
• Patents
• Publications
• Products
• Quality change
• Innovation
surveys
• Indexing
• Benchmarking
innovation
capacity
• Knowledge
• Intangibles
• Demand and
outputs
• Clusters and
networks
• Management
practices
• Risk/Return
• System Dynamics
Source: Milbergs and Vonortas, Measurement to Insight,
a paper prepared for the National Innovation Initiative
24. 11-8-2007 Center for Accelerating Innovation 24
What Did We Learn?
• Like human health no single indicator captures innovation’s
changing nature and multiple features.
• And report frameworks differ widely, no consensus
• Measures are for manufacturing not service sector
• Available indicators dominated by input R&D and Talent factors
• Connection between inputs to outcomes is weak and non-linear
• Output indicators focus on economic measures, not quality of life
• Sparse “hard” indicators for industry management practices
• Limited “soft” indicators on knowledge content, culture, intangibles,
global innovation patterns, creativity, skill requirements
• Timeliness, accessibility and presentation format needs
considerable improvement
25. 11-8-2007 Center for Accelerating Innovation 25
Measurement Issues
• Knowledge as assets
• Global trade in tasks
• Service sector innovation
• Entrepreneurship
• Intangibles
• Linkages (beyond geographic clusters)
• Innovation management practices
• Relationship of indicators to policy
• The national mindset and media
26. 11-8-2007 Center for Accelerating Innovation 26
Commerce Advisory Committee
Measuring Innovation in the 21st Century
INNOVATION DATA COLLECTION
· Improvements in service sector data
· Improvement in measurement of intangibles (including intellectual property)
· Leverage understanding of innovation through expanded sharing of and access to existing
data in firms
STRUCTURE OF THE NATONAL INCOME AND PRODUCT ACCOUNTS
· Development of annual, industry-level measures of total factor productivity
· Creation of a national innovation account by BEA as a satellite account
· Publish economic data based on data on firms as well as establishments to provide more
meaningful estimate of employment in innovation occupations
NEW INNOVATION OUTCOME MEASURES
· Development of a firm level measure of innovation intensity such as the ratio of annual
revenue from products launched in the last three years to total annual revenue
· Development of a market share based measures
· Development of a national index of innovation aggregating different measures
INNOVATION RESEARCH
· Assessment of the effect of collaboration and partnerships on innovation
· Analysis of administrative records and survey data to identify entrepreneurial start-ups and
study their early life cycle
· Easier access to and analysis of publicly available firm data
· Identification of drivers of and impediments to innovation
27. 11-8-2007 Center for Accelerating Innovation 27
Innovation Competitions
• Demand side incentive
• Expands range of ideas
(e.g. Solar Decathlon)
• Attracts innovators
around the world
• Inspires students
• Empowers entrepreneurs
• Raises public awareness
of exemplary designs,
products and services
Aachen Innovation Prize
28. 11-8-2007 Center for Accelerating Innovation 2828
Concluding Points
• US innovation policy is an incomplete
cocktail—boosting inputs not outcomes.
• National Innovation Dashboard: toward the
right metrics and value creation
• Solve “wicked problems” with innovation
ecosystems
• Innovation President essential to lead at
national and global level.
29. Questions, comments and insights
Egils Milbergs
Center for Accelerating Innovation
www.innovationecosystems.com
www.innovate.typepad.com
emilbergs@msn.com
